Pool Corp Faces Weather-Driven Revenue Decline: Analyst's Forecast And Strategy

Oppenheimer analyst Scott Schneeberger reiterated an Outperform rating on the shares of Pool Corporation POOL and raised the price target from $375 to $380.

It reported a second-quarter FY23 sales decline of 9.7% year-on-year to $1.857 billion, missing the analyst consensus estimate of $1.910 billion. EPS of $5.91 missed the consensus of $6.20.

A primary driver of 1H23 underperformance was weather, which impacted 2Q23 revenue by an incremental $30 million on top of $60 million-$70 million in 1Q23, said the analyst.

These conditions led to "slower maintenance activity than anticipated, reduced outdoor living construction activity, and deferred discretionary replacement activity," the analyst commented.

POOL now anticipates 2023 total revenue down 10% y/y (from down mid-single digits y/y), with new pool construction/remodeling/maintenance now inferred to decline slightly than previously anticipated, added the analyst.

The analyst is drawn to Pool Corp's long-term growth profile as the leading wholesale distributor in an industry benefiting from multiple tailwinds, such as migration to warmer climates, continued interest in backyard living features, and spending on higher-value technology-enabled pool content.

With 2023 likely to represent a trough, the analyst views POOL's entry point as opportune, considering the company's long-term growth story.

Price Action: POOL shares are trading higher by 2,8% at $371.533 on the last check Friday.